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Alternative Market Briefing

Third Point adds to its short book

Friday, May 11, 2018

Bailey McCann, Opalesque New York:

Dan Loeb is adding to his short book. Thursday on an earnings conference call for Third Point Reinsurance, Loeb said that the market regime shifted in the first quarter of this year leading him to add to his short position.

His comments on the call echoed some of the themes from his first quarter investor letter released earlier this month. In the letter, Loeb noted that investors will have to contend with increased uncertainty around multiples. As a result of this new volatility, Third Point has reduced its exposure by 20% and boosted its shorts by 25% of fund AUM.

Loeb also said in the letter that Third Point is spending more time evaluating risk arbitrage.

Neither Third Point nor Third Point Reinsurance did especially well in the first quarter. According to Bloomberg data, Third Point was flat for the first three months of the year. Third Point Reinsurance posted a loss. More defensive positioning could stave off future losses or potentially help performance if volatility hangs on.

Third Point's positions in Netflix, Pagesguro Digital, Airbus and BlackRock helped the hedge fund's performance in Q1. Bets on Nestle, DowDuPont, and Facebook didn't pan out.

Third Point also took a new position in United Technologies. In the letter, Loeb said he thinks the company should be split into three components in order to make up for poor performance and realize the value of its assets. Loeb also maintained his c......................

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